Last update: 17.09.2024 08:34
Thanks to the pillar 3a tax deduction, you can save taxes with pillar 3a. This is not only worthwhile because you have made provisions for later. But also because you pay less tax today. The pillar 3a tax deduction can make all the difference, especially when tax progression kicks in. And what about pillar 3a taxes on payout/withdrawal? Discover our 7 best tax tips for 3a.
In the Swiss pension system, the 3rd pillar is your voluntary, private pension provision for retirement. It is made up of pillar 3a and pillar 3b. Payments into pillar 3a are tax-privileged because the state wants to create an incentive for your private pension provision. If you can save even more money, this falls under pillar 3b. This does not enjoy any tax advantages.
7 tips for the pillar 3a tax deduction and pillar 3a taxes on payout
You can deduct payments into pillar 3a from your taxable income up to a maximum amount. The maximum pillar 3a tax deduction changes approximately every two years.
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Pillar 3a maximum amount 2025
The pillar 3a maximum amount will increase from January 2025.
Read the article to find out the maximum amount you can pay in for maximum tax savings.
Take advantage of the free reminder by e-mail – so you never miss a 3a payment again.
Pillar 3a maximum amount 2024: how much tax deduction is possible?
The pillar 3a maximum amount is redefined every two years at the latest in 2024.
Read the article to find out the maximum amount you can pay in for maximum tax savings.
Take advantage of the free reminder by e-mail – so you never miss a 3a payment again.
Our tip: Pillar 3a tax deduction is linked to the calendar year
Saving tax with pillar 3a is currently still tied to a calendar year. If you have not made a payment in one year, you cannot make up for it later and cannot claim it for tax purposes in the current year or later. A missed payment into pillar 3a is still irrevocably missed. You can find out more about this in this specialist article.
Tip 1: reduce taxable income with a pillar 3a contribution
You can deduct your pillar 3a contributions from your taxable income. It doesn’t matter whether you make the payments all at once, in several small installments or two large ones. As with the “Every cent counts” donation campaign, you don’t have to deduct the maximum amount for pillar 3a – smaller amounts are also possible. It only depends on the amount you pay in during the calendar year. The amount you pay in reduces the amount of income on which you are taxed up to the maximum amount.
Our tip: Tax savings even with small contributions
You don’t have enough left over to pay in the maximum pension contribution? No worries. Less is better than nothing. You can also pay less than the maximum amount into your third pillar and get tax savings on it. Perhaps you set up a standing order and pay in a smaller amount every month or quarter? Thanks to the compound interest effect, this will add up to a small fortune over the years.
Your tax advantage: less taxable income means that you have to pay less tax on your remaining income after making a 3a payment.
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Pillar 3a Who can pay in?
Tip 2: break the tax progression with a pillar 3a tax deduction
How much tax can I save by paying into pillar 3a? We hear this question again and again. The answer is “It depends”. Because the amount of tax you save depends on your marginal tax rate. And this is determined by your place of residence, marital status, taxable income and religious denomination.
How much you save in tax therefore depends on “where” you are on the tax curve. This is called tax progression: higher incomes are taxed at a higher rate than lower incomes. The more you earn, the higher your tax rate. In concrete terms: you pay more tax on the next CHF 1,000 of additional income, i.e. on the previous CHF 1,000 of your income.
Your tax advantage: With a pillar 3a tax deduction, you reduce your taxable income and thus break the tax progression. Saving taxes with pillar 3a is completely legal and politically desirable. It is one of the most effective tax planning measures for Mr. and Mrs. Swiss 😃
For most people, the tax saving is between 25 % and 40 % of the amount paid in. For every CHF 1,000 paid into pillar 3a, you can therefore save between CHF 250 and 400 in income tax.
Let’s take a look at two real examples of how a pillar 3a tax deduction affects federal, cantonal and communal taxes.
Tax savings – example 1: Fränzi and Pesche in Bern save over CHF 4,000
The reformed couple from Bern have a combined net income of CHF 140,000. If they both pay the maximum into their pillar 3a, their taxes will be reduced by around CHF 4,200. This means that Fränzi and Pesche finance 30% of their 3a payment through tax savings.
| in Franconia | without pillar 3a | with pillar 3a | Advantage | |
| Income | 140’000 | 140’000 | ||
| Pillar 3a tax deduction | 0 | 14’112 | ||
| Taxes (federal, cantonal, municipal) | 26’078 | 21’830 | 4’248 |
Tax savings – example 2: The tax office in Zurich pays Daniel a quarter of his pillar 3a deposit
Daniel lives as a single person in Zurich and has to pay tax on an income of CHF 80,000. If he makes full use of the maximum amount, he benefits from a CHF 1,750 lower tax bill. The tax office thus finances around a quarter of his 3a payment. His marginal tax rate falls to 21.2 % with a deposit of 26.5 %
| in Franconia | without pillar 3a | with pillar 3a | Advantage | |
| Income | 80’000 | 80’000 | ||
| Pillar 3a tax deduction | 0 | 7’056 | ||
| Taxes (federal, cantonal, municipal) | 10’795 | 9’117 | 1’678 |
You can use the following tax calculator to calculate your individual 3a tax savings. You can see immediately and without registering how much tax you can actually save. The link takes you to the tax calculator of the Federal Tax Administration.
Tip 3: avoid wealth tax with pillar 3a
In Switzerland, all net assets are subject to wealth tax at cantonal level, even if individual cantons only apply this from a certain level of assets (tax-free minimum). Net assets include all monetary rights to property, receivables and participations minus debts.
And here’s the thing: Pillar 3a assets (such as insurance policies, accounts or securities investments) do not count as net assets and are therefore not subject to wealth tax during the term of your 3a investment.
Your tax advantage: You do not have to list pillar 3a assets as assets in your tax return. The assets are not taxed and do not increase your tax rate for other taxes.
Tip 4: Collect tax-free pillar 3a interest
Your pillar 3a investments should give you room for maneuver in old age. To do this, they must generate income and should benefit optimally from the compound interest effect. And this is precisely where another tax advantage of pillar 3a has a positive effect. During the term, all interest, income or capital gains on your pillar 3a investments are tax-free. As your income is not reduced by tax during the savings phase, you benefit to the maximum from the compound interest effect.
Your tax advantage: You do not have to declare interest and income in your tax return or pay tax on them. And no withholding tax is deducted. Great, isn’t it?
Tip 5: Benefit from a low tax rate on withdrawals with pillar 3a
After years of paying tax-privileged contributions into your private pension plan, you will want to withdraw your pension money at some point in your retirement – logically. And even then, a tax gift awaits you in pillar 3a.
This is because your pension money is not taxed together with your other federal, cantonal, municipal and church income when you draw it. No, it is taxed separately and at a significantly lower, reduced rate. This tax rate is substantially lower than the income tax rate. The tax on the payment of pillar 3a is called capital payment tax.
So the tax gift 🎁 is: pay into your pension at your marginal tax rate and take a (usually low) single-digit amount out of your pension later. Yay.
Tip 6: Pillar 3a taxes on payout – spread the withdrawal over several years!
But watch out: you need to be careful with pillar 3a payouts! Even if the lump-sum payment tax is comparatively low, it is still progressive. Most cantons count all withdrawals from the pension fund, vested benefits and pillar 3a within one year together.
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Capital payment tax
When you withdraw money you have saved from your pension, a tax is payable: the capital payment tax (also known as capital tax or capital withdrawal tax).
Find out in the article how you can cleverly optimize this tax.
Tax savings example 3: Tinu saves almost CHF 7,000 through staggered pillar 3a withdrawals
Tinu is a single, reformed Bernese man. With pillar 3a, he pays tax on the payout – around CHF 32,300 on his capital of CHF 400,000 in one year (8% average tax rate). However, if he can spread the pillar 3a payout over two tax years, he saves around CHF 6,800 in taxes. Tinu’s average tax rate of 6.4 % is also significantly lower than before (8.1 %).
| in Franconia | Single payment in 1 year | Staggered purchase over 2 years | Advantage | |
| Capital payment | 400’000 | 200,000 per year in each case | ||
| Taxes | 32’311 | 12,748 per year | ||
| Amount paid out | 367’689 | 374’504 | 6’815 |
Your tax advantage: You can save a lot of tax by spreading your lump-sum payments over several years. To do this, you need several 3a accounts so that you can make staggered withdrawals and thus save tax on withdrawals with pillar 3a.
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How many 3a accounts make sense?
Tip 7: Enter the pillar 3a tax deduction in your tax return
How do I declare my 3a contributions in my tax return? You really don’t need a tax advisor for that. Honestly. At the beginning of the following year, your trusted 3a provider will automatically send you a highly official payment certificate. Depending on the provider, this can be in paper or digital form, by e-mail or in your pension app. It shows how much you paid into pillar 3a in the last calendar year. If you have made several payments, these will be added together and you will only ever receive one certificate per provider. And if you have made pillar 3a payments with several providers, you will receive several payment certificates. You transfer these values to the corresponding field of the official tax form in your tax return and enclose the tax certificate(s) from the pension foundation(s). You’re done!
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Summary of pillar 3a tax deduction and tax savings with pillar 3a
With our tax-saving tips for pillar 3a, you will not only benefit with small amounts when you pay in, but also during the term and when you make your pillar 3a payout. Because we want you to get more out of your money.
Find the best pillar 3a
Unbelievable – most people pay too much for their pillar 3a and get too little return. Are you one of them? Find out which pillar 3a is best suited to you with just a few clicks in our free comparison.
